Thoughts on Bill McDermott’s SAP Keynote at Sapphire Now 2014 – eBay, Ariba, Fieldglass, and More

I watched yesterday’s live keynote by SAP CEO Bill McDermott and found it both entertaining and curious at the same time. I’ve never seen Bill live and he is like an East Coast version of Larry Ellison. My wife is from Long Island, and he sounds like he’s from there (e.g., call centers are “coo-awl centahs”). He also seems like he could be the CEO of a Ferrari dealership as much as a large software company.

He is obviously a charismatic leader, and it’ll be interesting to see if he can also be a consensus leader to unite the various cultures within SAP. If you want to watch the whole keynote, you can do so here, but I thought I would give you an abridged version of the quotable quotes and some quick observations. In another post I will discuss the “announced partnership” with eBay (no formal press release and interesting to say the least).

After an introduction to three young entrepreneurs (SAP is now cool, young, and hip – you got the memo, right?), the main message was a good one, focused on one word: simple. The focus is on eradicating complexity in the application stack, the UI, the ease of dealing with SAP (including pricing), the SAP organization itself (e.g., dismantling a separate cloud organization), and how SAP builds and embraces its partner ecosystem.

It at least shows that SAP is listening to its customers and also perhaps having an Alka-Seltzer moment (i.e., the old commercials with the bloated guy saying “I can’t believe I ate the whole thing”) with regards to its large and “diverse” application portfolio. Some of the promised quotable quotes:

“The most intractable CEO issue of our time is complexity.”

“Are we [companies] getting to the point where we’ve had enough?”

“SAP has a bold vision for the future of business.” “At SAP, we see a dream for a simpler world, for a simpler SAP, and for a simpler customer experience.”

“And yes I do realize that there will be those you, especially the pundits, who say we can’t.” “We can – and we will – beat complexity.”

“We can help our customers run simple. I realize that this is an inflection point with SAP.”

This is good stuff. It’s nice at least to hear the recognition of reality. And as a pundit of sorts myself, I’d have to disagree with the accusation that analysts say that SAP can’t. In fact, most of them, including myself, want SAP to be a strong competitor by virtue of value that it truly adds rather than just reacting to best of breed players, freezing the market, delaying, and then acquiring or finally building out the functionality. Bill had a good point about “leadership vs. management” in terms of management creating complexity and leadership helping to reduce it. Of course, SAP leadership has been responsible for the acquisition binge that it, Oracle, and other players have pursued to expand their footprint. But let’s not get in the way of story.

Bill went on to outline how SAP would be bundling SAP Fiori and SAP Personas in with existing software (although SAP Personas doesn’t really help out SAP SRM which is built on Web Dynpro screens rather than Dynpro). As he said: “We want everyone to use a gorgeous User Interface from SAP.” The audience was very happy to hear this announcement. As Computer Weekly reported, Philip Adams, chairman of the UK & Ireland SAP User Group, welcomed the free Fiori announcement:

"SAP’s announcement that it will be providing Fiori and Screen Personas to customers as part of their maintenance contracts is good news. There has never been any doubt about the quality of these new user experience tools, and with the news today it will be much easier for us, as customers, to take advantage of them… The user experience of SAP has been a complaint of members for some time. As part of Sugen, and at a local level, we’ve been pushing SAP on this matter as our members felt strongly that they shouldn’t have to pay separate licence fees for Fiori. This move shows that SAP is listening to its customers and takes the concerns of user groups seriously. A survey we’ve just run showed the vast majority of organisations expected Fiori to be provided as part of maintenance and that additional licences would put them off using it. With companies paying up to 22% in support and maintenance fees, this isn’t surprising."

The next part of the keynote continued to hammer home the simplicity message, but also the statement that SAP had things well under control, with German engineering well in place, HANA as the DNA, and SAP moving strongly into the cloud:

“SAP is simple from now on.”

“We promise to be your trusted innovator.”

“We now have 20 data centers, 36 million users, and 70,000 customers running industry applications on the cloud.”

“You can run your entire business on the business suite in the cloud on Hana.”

“You can put your line of businesses in the cloud.”

“You’re in Brazil? We gotta cloud there for you! You’re in China? We gotcha covered! All currencies, all languages, fully integrated. This is the key now! The integrated cloud! This is where it’s at!”

You have to love the “we gotta cloud for you” and a bridge to sell you to take you there. Bill then asks, seemingly impromptu, “Who’s got an iPad?” One of course magically appears and the iPad demo then showed a simple mashup screen of a project starting in SuccessFactorsthat could then go to Fieldglass or Ariba for the contingent labor portion or outsourced SOW-based work portion of the project.

It was funny when Bill looked at the pictures of the team members on the screen, saying, “We got a good looking team!” Of course, if there’s one thing SAP does very well, it’s having good-looking models on its stock art photos in the marketing materials – although I’ve yet to see a person that actually looks like a real CPO on these things.

Bill also had a funny quip about contingent labor that is so true: “You wanna make a CEO sweat? Go talk to him any time about their contract labor. How many contract laborers you got on the payroll? All of a sudden, they’re looking at the floor, the ceiling, and they’re ordering another cup of coffee” (pronounced “cawfee” of course).

Ironically, Bill then began touting the strength of the “suite in the cloud” with quotes like:

“Cloud + SAP Hana = simple”

“HANA integrates all of SAP solutions in the cloud.”

“The integrated cloud is the winning cloud.”

“As we look forward, the suite always wins.” “In the late 90s and early 2000s, everything was best of breed. We need to have the best of breed. Well, they may have been best, but they sure didn’t breed!” Ba-dom-boomp-pshh!

Of course, SAP ECC, SAP SRM, Ariba Services Procurement, SuccessFactors, Fieldglass, and the Ariba Networkare not all integrated by any stretch of the imagination, as we wrote about here – but it’s a good story anyway and of course powered by HANA. HANA as a database is certainly core, and Bill mentioned the 12x memory usage improvement and 50x overall performance improvement in Ariba Spend Visibility.

Bill then mentioned that SAP had to also eat its own dog food and “be an exemplar” in terms of implementing its own software. He mentioned that 1,300 SAP suppliers were added to the SAP Business Network in six months, driving 20-percent productivity improvements. There are presentations on SAP’s implementation out there such as this one that are worth checking out.

Finally, and most interestingly, Bill then moved to the SAP Business Network. He said, “Our network philosophy is simple. Connect to any technology, leverage open architecture, and extend everything through game changing partnerships.”

Unfortunately, this hasn’t been really been demonstrated in the market so far, but SAP HANA Cloud Platform seems to be going in a good direction, and SAP did drop a bit of an interesting bombshell yesterday. It wasn’t the announcement that “We are launching the AribaPay Network” (which was announced 13 months ago), nor the offer of “For the next 30 days, we will connect all your suppliers for free” (which has always been true to let suppliers hang out a basic virtual shingle).

Rather, the biggest announcement came from a deal made with eBay. Basically, if a requisitioner can’t find an item on the standard corporate catalog in Ariba, they can punch out not just to the Ariba Network for a spot buy, but also to eBay for non-auction items. Bill said it was the “largest business network and largest consumer marketplace coming together.” This isn’t true. Amazon is five times eBay’s revenues and Alibaba is about 15 times, but regardless, the more interesting aspect of this is SAP wanting to connect to multiple marketplaces. We’ll cover this announcement, the demo, and some of the implications in our next post, but for now, all I can say is that like the idea of Santa Claus, I want to believe in what Bill is saying:

“We want you all to run simple. This is more than a slogan for SAP. ‘Run simple’ is an organizing principle for our company. We will all measure ourselves by how we ‘run simple.’ We’ll ask the tough questions [about whether SAP is simple to customers in terms of product, UI, business partnering, ecosystem, etc.]. If not, hold us accountable. ‘Run simple’ is a rallying cry that unites all of us… Running simple means helping the world to run better and improve people’s lives.”

If nothing else, “run simple” itself is simple and a message that customers appreciate SAP saying. And if there is a company that needs to hear that message, and has “opportunities for improvement,” it’s SAP. Like Bill says, “now the heavy lifting begins.” Heavy indeed, but if there’s a firm that has strong pride in tackling the challenge, SAP is it.

Pierre – You have a knack for making the unbelievably trite stories fun to read. You should apply your skill to politics. Seriously. SAP statements like, “From now on, we are simple” and ““We promise to be your trusted innovator” are as believable as “Change We Can Believe In” or “Compassionate Conservatism”.

Tim, yes, revenue share with eBay on fee. Only 15 basis points on ASN and 8-12% on eBay – so SAP sees a clear arbitrage and eBay needs the volume, to keep up with Amazon et al.
See our 2 part post on the SAP eBay partnership.
Thanks for writing in!

Curious how the “eBay partnership” might work with respect to the ASN and both eBay and SAP’s interest in taking a % of the transaction as a fee. Bill pushed this eBay approach as well as the Discover payment vehicle which we’ve not heard much from since announced 12 months ago; are these just big names for a keynote presentation or real innovation for customer benefit? SAP has a great solution for managing financials and manufacturing, but simplicity and usability beyond power users is not something I can see happening at SAP.

With Vishal leaving SAP, who is leading HANA commitments? SAP has to lower the price for HANA and New GUI to compensate for suffering they subjected to customers. Walk the talk. May be in 20 years….another Oracle story. Desclaimer: I have been working on SAP since early R/3 days.

Hey, at least they acknowledged the problem! Hasso did a similar mea culpa’s in his keynote, basically… “sorry we were so complex over the last 30 years”. But to quote Monty Python, the next statement was “I got better!”. HANA solves everything.